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IT in India: Big successes, large gaps to be filled
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The IT industry has grown spectacularly in the past decade — at least the export segment. The industry is at that critical inflection point where its multiplicative impact will start becoming visible and tangible. Going by current trends, IT will have the same impact in the next three to four years as it has had in the past twenty years.
A couple of months back, the securities firm CLSA came out with a detailed analysis of the Indian IT industry. The analysis revealed:
20-25 percent of India’s GDP expansion over the next three to four years will come from IT;
India’s IT exports will cross the country’s oil imports from 2007-08 onwards assuming that oil prices are at around $65 a barrel;
The IT industry — directly and indirectly — will pick up a third of the addition to the urban labour force over the next three to four years.
What’s bothersome is the slow geographical spread of IT. Let us take IT exports as a whole, which in 2006-07 were around $32 billion or around Rs 144, 214 crore. This is how it was spread across locations of the software technology parks (STPIs).
Seven cities accounted for a whopping 95 percent —Bangalore (33 percent), the National Capital Region (15 percent), Chennai (14 percent), Hyderabad (13 percent), Pune (10 percent), Navi Mumbai (8 percent) and Kolkata (2 percent).
Seven cities together account for yet another 3 percent — in descending order of contribution these are Mysore, Bhubaneswar, Mangalore/Manipal, Gandhinagar, Thiruvananthapuram, Mohali and Jaipur.
Four cities together account for yet another 0.6 percent: Indore, Vishakapatnam, Kochi and Coimbatore in descending order of contribution.
There are valid reasons for this geographic distribution. The IITs of Kanpur and Kharagpur are almost non-existent on the IT map of India, proving that the IITs have had great global impact but their local impacts have not been commensurate with the hype that has come to surround them. Furthermore, SEZs appear to be increasing the digital divide. I have always felt that the true value of SEZs must be judged by the extent to which they help promote labour-intensive manufacturing. But so far, of the 142 SEZs notified, 86 are for IT and ITES alone. And of these 86, the usual suspects are most prominent — 26 are in Andhra Pradesh, 14 in Tamil Nadu, 13 in Karnataka and 10 in Maharashtra, making a total of 80 percent in these four states alone.
The need now is to think of the under-served regions and areas. Sure, infrastructure and connectivity will have to improve but some entrepreneurial endeavour will not be out of place. TCS is working to develop Guwahati as an IT location using the IIT there as a focal point. Nasscom needs to engage with state governments that are now not on the IT radar screen and work with them to develop promising locations.
How long can the IT industry be in the “To HiB or not to be HiB” mindset? Seventy-five percent of our software industry is exports, unlike China, where the domestic market consumes 75 percent of the business. We have had the computerisation of land records in a couple of states like Karnataka and, of course, the computerisation of railway reservations, which has had tremendous social value as well. We need to take up a couple of national initiatives in a PPP mode where IT can bring about a transformation.
The author is Union minister of state for commerce. This piece has been excerpted from his address to the Nasscom executive board on September 19
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Updated on:
01 Oct, 2007
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